Bartsch, F., Buhlmann, F., Kirschenmann, K. and Schmidt, C. (2021). Is there a need for reverse mortgages in Germany? Empirical evidence and policy implications. EconPol Policy Report 31, April 2021

We analyse the market for reverse mortgages in Germany and explore reasons why the market it so small. While being a product that would increase household welfare, the market is not well developed and would benefit from stronger regulatory framework.

Schmidt, C. (2021). Strong tenant protections and subsidies support Germany’s majority-renter housing market. Brookings Institution brief. In "Comparing Rental Housing Markets Across the Globe", Jenny Schuetz, series editor. Washington DC: Brookings Institution

This essay is part of a multi-country case-study project on rental markets and policies around the world in which we compare markets in France, Germany, Japan, Spain, the UK and the US.

Schmidt, C. (2019). The quest for affordable owner-occupied housing in Germany. Journal of European Real Estate Research 12(3), 365-379

I shed light on a new demand subsidy for low- to medium-income households and its likely price implications for Germany.


Working papers

Age at Arrival and Immigrants' Housing Tenure: Evidence from the UK (with O. Oladiran and A. Sunmoni)

We study the effect of age at arrival on immigrants' homeownership probability using a dataset representative of the population resident in the UK in 2014-2016. Age at arrival has previously been found to play a significant role in immigrants' life outcomes. But while most papers study certain age groups and a limited number of geographies, we observe immigrants of all ages at arrival and the full range of countries of birth. Consistent with the literature, we find no significant difference between immigrants arriving under the age of 18 and native Brits when it comes to owning a home in later life, controlling for other factors. However, immigrants exhibit significantly lower probabilities of being homeowners the later they enter the country, and this pattern holds for most regions of birth. Only those from South-East Asia and Pacific who immigrate at later stages in their lives are significantly more likely to own their homes than otherwise comparable people born in the UK, while non-UK, Western European immigrants are most similar to the UK-born. The differences between age groups even largely exist when we compare immigrants with second-generation immigrants, whom we deem to be a better comparison group from a cultural perspective.


Risk attitude and capital market participation: is there a gender gap in Germany? (with J.-C. Fey, O. Lerbs and M. Weber)

Do women invest differently than men? Using the Deutsche Bundesbank Panel on Household Finances (PHF), we replicate earlier findings that participation in stocks and the conditional share held in equity are generally lower among women than among men, even when we account for risk aversion and other relevant factors. Above and beyond most previous literature, we also analyse financial wealth held in fund shares, fixed-income securities and certificates. Adjusted for controls, women hold less wealth in certificates but more in fund shares than men. We also report novel results when we decompose the raw gender gap in capital market participation rates. This gap is mainly explained by different risk attitudes and monetary endowments, but women would participate even less in the capital market if they reacted to risk aversion in the same way as their male counterparts, implying that risk-averse men may shy away from risky assets much more than similar women.

Presented at:

  • 3rd Household Finance Workshop in Heimbuchenthal, Germany, October 2018 (presented by co-author)

Firms' Births, Relocations, Deaths, and Rental Time on the Market: A Quasi-experiment with German Commercial Real Estate (with J. Cohen and Y. Huang)

Using a proprietary dataset recording all firm births and deaths in Germany including their addresses at the plant level, we analyze how road infrastructure affects firms' location choice and time on the market for commercial rental real estate. In particular, an early 2012 quasi-experiment in Cologne, Germany allows us to measure how the market for commercial real estate incorporates new information into rents and time on the market when an important bridge is closed for heavy vehicles. As a crucial part of the highway infrastructure around the Cologne-Leverkusen area in Germany, this bridge is frequented by about 120,000 vehicles every day and was suddenly closed for trucks over 3.5 tons in 2012. We use difference-in-differences as well as triple-difference-in-differences as our identification strategies, and find that while rent levels are not affected by the bridge closure, clustering in more conveniently located areas becomes significantly more pronounced. We take this as evidence that infrastructure matters a lot for firms that ship their goods across the country. In other words, firms on the west side of the closed bridge face relocation decisions because the largest part of the German road network is on the east side of the bridge. With this limited access to the major road networks, we find that "treated" rental units experience a longer time on the market than untreated units, so the market avoids commercial real estate that has no access to major road networks.

Accepted for presentation at:

  • European Meeting of the Urban Economics Association in London, April 2020 (cancelled due to COVID-19)
  • ASSA-AREUEA conference in Chicago, USA, January 2021 (withdrawn due to adverse impacts from the pandemic)


The odd one out: asset uniqueness and price precision (with T. Lindenthal)

Based on applied machine learning (ML) techniques this paper suggests that round prices are not purely random events but are linked to liquidity and the uniqueness of the asset. First, using residential transaction data from the UK, we show that the availability of information from comparable sales influences the odds of observing a sale at a round price. Second, we explore ways to play to the strengths of deep neural network and incorporate computer vision approaches and building level imagery. Adding information on a building's vintage and the typology of its direct surroundings to the training data boosts the predictive power of the suggested ML classi ers. When a house is "the odd one out", its value will be relatively difficult to establish which implies that sales prices suffer from a relatively low signal-to-noise ratio. Automatic appraisal systems or index estimations could improve their accuracy by incorporating our findings.

Presented at:

  • Weimer School Hoyt Fellows meeting, May 2019 (presented by co-author)
  • ASSA-AREUEA conference in San Diego, USA, January 2020

Home is where the health is: housing and adult height, 1870-1965

Poor sanitation and overcrowding have severe impact on the disease environment. This study analyzes the impact of housing quality on physical health, proxied by adult height, during the late 19th and the first half of the 20th centuries. Using panel data on 14 advanced economies, the empirical results suggest that improved housing quality—proxied by rising housing prices—significantly contributed to human stature by reducing overcrowding and creating better hygienic standards. To be precise, a one-standard-deviation increase in real house prices translated to 1–1.2 cm taller adult heights—an amount which at that time was associated with 1.2 to 2.1 years of additional life expectancy on average. Also, 15 percent of the average height increase of 10 cm across all countries can be attributed to housing quality. These findings are robust even when we control for income.

Presented at:

  • ASSA-AREUEA Conference in Philadelphia, USA, January 2018 (poster)
  • Annual conference of the Economic History Society (EHS) in Keele, England, April 2018 (view press release here)
  • Conference of the European Real Estate Society (ERES) in Reading, UK, June 2018
  • AREUEA International Conference in Milan, Italy, June 2019

Homeownership: Boon and Bane

I study the relationship between per-capita GDP growth and the homeownership rate in a panel of 21 industrialized countries during the period 2000--2014 to examine whether investments in housing have different consequences for an economy than investments in non-housing. I use an IV approach because homeownership is highly endogenous. After controlling for a number of variables to reduce further endogeneity problems, I find evidence for an initially positive impact of homeownership on the economy, as suggested by studies on positive externalities of owner-occupied housing. However, there is a critical homeownership rate after which this relationship becomes inverse; i.e., the relationship between homeownership and GDP growth is hump-shaped: the negative externalities appear to outweigh the positive ones starting at a homeownership rate of roughly 68 percent. Hence, owner-occupied housing should not be encouraged beyond this socially optimal rate, as the returns to housing may be lower than those to non-housing. While a slight deviation from the optimal point has little effect on GDP, which is the case for the U.S., German-speaking and southern European countries could gain by adjusting their homeownership rates.

Presented at:

  • 2nd International Conference on Applied Macro, Theory and Empirical Finance in Thessaloniki, Greece, May 2016
  • 6th Ioannina Meeting on Applied Economics and Finance in Corfu, Greece, June 2016
  • AREUEA International Conference in Amsterdam, Netherlands, July 2017
  • RWTH Aachen Brown Bag Seminar in Aachen, Germany, July 2018

Work in progress or preparation

Aesthetic Preferences for Residential Architecture: Finding Ground Truth with Machine Learning Approaches (with T. Lindenthal and W. Wan)

House prices in Frankfurt since 1290 (with T. Lindenthal)

House prices in Scotland, 1800–1940


Teaching cases in economics and finance

Schmidt, C. (2016). A Journey Through Time: From the Present Value to the Future Value and Back Or: Retirement Planning: A Comprehensible Application of the Time Value of Money Concept. American Journal of Business Education 9 (3), 137–143. 

Schmidt, C. (2016). Burgernomics: An Instructional Case on the Law of One Price. Journal of Business Case Studies 12 (2), 77–82.

Moersch, M. and C. Schmidt (2015). Of Haircuts and Extensions: An Analysis of Greek Government Debt. International Research Journal of Applied Finance VI  (8), 1–11. 

Schmidt, C. and T. Azarmi (2015). The Impact of CoCo Bonds on Bank Value and Perceived Default Risk: Insights and Evidence from Their Pioneering Use in Europe. Journal of Applied Business Research 31(6), 2297–2306.